GENERAL REGULATIONS - IBAI

1 --------------------------------- Tariff Advisory Committee EAR/1-1-01 1 GENERAL REGULATIONS 1. Jurisdiction - This applies to all Risks located in India. 2 Scope This Tariff applies to Erection All Risks/ Storage Cum Erection Insurance Rating of Risks with Sum Insured upto Rs. 100 crores. (Risks with Sum Insured above Rs. 100 crores and upto Rs. 1500 crores shall be rated by Insurers as per guidelines issued vide Circular 2001/7 dated 1st January, 2001, see Annexures I & II ) 3 Marine/Transit Risks connected with Erection All Risks Insurance - Where Marine/Transit Insurance connected with Erection All Risks Insurances of any project is placed in India simultaneously or later on in one combined or under separate Policies in one department or in different departments, the matter relating to Erection All Risks/Storage-Cum-Erection Cover is required to be underwritten, subject to these GENERAL REGULATIONS .

2 4. Sub-Contracts Forming part of a project - As regards Sub-Contracts forming part of a Project, it is clarified that irrespective of whether the Project value has been broken into various Sections and orders/contracts are placed with different suppliers/ contractors/Sub-Contractors or the Insureds carry out the work themselves departmentally, the Insurances for all such Sub-Contracts are subject to these GENERAL REGULATIONS . 5. SUM INSURED Definition - For this purpose, the Sum Insured on the following items are to be taken into account - a) Marine (Imports) -landed cost at site b) Marine (Indigenous) -landed cost at site c) Cost of Erection (exclusive of preoperative expenses but inclusive of cost of visits of specialists and supervision charges). d) Permanent Civil Engineering Works e) Half the escalated value, if escalation is opted for.

3 --------------------------------- Tariff Advisory Committee EAR/1-1-01 2 DUTY IN CASE OF OVERSEAS CONSIGNMENTS In respect of overseas consignments certain additional valuation on account of the following will get added to the CIF value, after the goods are cleared at the docks -- i) Custom Duty paid on clearance and ii) Clearing & forwarding charges to the agents concerned. In such cases the `Duty' can be covered at full rate applicable for Marine (imports). 6. Storage Risks at the Fabricator s Premises/Workshop The Storage Risks at the Fabricator s Premises/Workshop can be covered as an extension to the EAR/SCE policies and for such storage the Rate and Excess are as under Storage Rate Rs. per mille per month or part thereof Excess Rs. 5000 per claim during storage 10 % claim amount subject to minimum of testing period excess per AOG/Fire/Explosion claim.

4 7. ERECTION ALL RISK RATES - A) 1) Column of Rate Schedule- Prescribes rate for first two months of the project period (first month plus one month s testing), the same rate will apply for EAR Insurances for a period of two months even where the testing cover is not required. Similarly, the rate prescribed under column will apply for EAR Insurances where the policy period (including testing period) is two months or less and the testing period is one month or less. 2) EAR/SCE period - The EAR/SCE period has to commence from the date of arrival of first consignment at the site of erection. However, it may happen that in a few cases the Insured may take EAR/SCE insurance at a much later date. In all such cases irrespective of the date of commencement of the insurance, the SCE rate has to be computed for the total period commencing from the date of arrival of the first consignment at the site of erection.

5 --------------------------------- Tariff Advisory Committee EAR/1-1-01 3 In all such cases the Insurers should clearly stipulate that any damages which have taken place prior to commencement of the insurance, are not covered by the policy. 3) Column - Rate Schedule prescribes Excess' to be applied on `Normal Period' and `Testing Period'. Excess should be applied on the net claim amount after adjusting for salvage, depreciation and under insurance. Note - Excess for Gas Turbine Plants - a) For a Gas Turbine Power Station, the excess prescribed will apply to all items. b) For a Combined Cycle Power Plant, excess applicable for the Gas Turbine section will be the existing excesses prescribed under Gas Turbine/CCPP item. However for Steam Section the excesses applicable will be as per tariff item Steam Power Plant.

6 B) VOLUME DISCOUNT UNDER EAR/SCE TARIFF i) No Volume discount should be granted for projects with Sum Insured upto Rs. 100 Crores. ii) For projects with Sum Insured above Rs. 100 Crores and upto Rs. 1500 Crores, the applicable Volume Discount shall be as per Annexure I . iii) Volume Discount will not be applicable for the following extensions: a) additional Rate for risks situated in Earthquake zone I & II b) additional Rate for testing of second hand machinery c) Policy Extension Rates d) Maintenance Period Rate e) Air freight f) additional Custom Duty g) Fabricators premises extension h) Intermediate Storage 8. additional RATE FOR DISMANTLING COVER - The additional Rates for Dismantling Cover will be 60 % of the total SCE Rate irrespective of the period for Dismantling. --------------------------------- Tariff Advisory Committee EAR/1-1-01 4 However, if the risk of testing is to be covered for such second hand machinery and/or equipment, the additional minimum rate will be Re.

7 Per mille per month or part thereof. No volume discount is applicable on this additional rate for testing of second hand machinery. The Dismantling Extra of 60 % should be applied on the total EAR/SCE Rate excluding additional `Testing' and `Earthquake' Extras. 9. additional RATES FOR EARTHQUAKE (FIRE & SHOCK) PERILS - a) All `Acts of God perils other than Earthquake (Fire & Shock) are taken care of in the SCE Rates prescribed. However no reduction in the rate can be allowed for excluding any of these perils. (b) Irrespective of the sum insured for SCE/EAR, the following additional rates are to be charged over the SCE rate for risks located in Earthquake Zones (as defined in Fire Tariff) Zones Rate Zone I Rs. per mille per annum Zone II Re. per mille per annum Zone III Nil Zone IV Nil c)These additional rates take care of Earthquake (Fire & shock) perils only. d) These additional rates are to be charged on pro-rata basis for period shorter than one year.

8 E) Earthquake cover is optional in both the Zones I & II but this cannot be opted Mid-term or for part of the total SCE Period. Thus these extras (viz. Rs. %o per annum for Risks in Zone I and Rs. per mille per annum for risks in Zone II) are to be charged for total SCE Period (including all extensions). (f) For policy for extensions with overall period(including original policy period) in excess of 12 months, the earthquake rate should be reworked. g) Earthquake rates are subject to Discount in respect of higher excess if opted for. --------------------------------- Tariff Advisory Committee EAR/1-1-01 5 h) Earthquake cover on first loss basis - Earthquake cover could be granted on first loss basis with Sum Insured limits of 20% (OR 10%) of the total Sum Insured at the rates of 50 % (OR 40 %) of the tariff rate calculated on the total sum insured.

9 10. EXCESS FOR CLAIMS ARISING OUT OF MAJOR PERILS/ACTS OF GOD PERILS - The minimum excess for claims arising out of Acts of God Perils (viz. Earthquake-FireandShock, Landslide/ Rockslide/ Subsidence, Flood/ Inundation, Storm/Tempest/Hurricane/Typhoon/Cyclone) shall be as under Excess for AOG Perils 10 % of the claim amount subject to a minimum of the Testing Period Excess with an upper limit of Rs. 5 Crores. : -If excess for Normal and Testing period are , 000/- and Rs. 40,000/- respectively then the Excess for claims arising out of the Acts of God Perils shall be 10 % of the claim amount subject to minimum of , 000/- with an upper limit of Rs. 5 Crores. The above excess shall apply separately to each incident-giving rise to loss or damage. For this purpose an incident shall not be considered to have terminated until there have been seven consecutive days freedom from the perils concerned and only thereafter will the above excess amount apply afresh.

10 In respect of those EAR/SCE risks located in Earthquake Zone I or II where the clients do not require cover for Earthquake Perils, the above excess will be applicable for all Acts of God perils other than Earthquake (Fire & Shock). Note - The excess should apply on the net claim amount after adjusting for Salvage, depreciation and under insurance. 11. RULES FOR FIRE PROTECTION FOR CONSTRUCTION/ERECTION SITES - For unprotected construction/erection sites of risks having Sum Insured less than Rs. 50 Crores excess applicable shall be 10% of claim amount subject to minimum of testing period excess with an upper limit of Rs. 2 Crores. In respect of Risks with Sum Insured of Rs. 50 Crores and above, the excess applicable shall be 20% of claim amount subject to minimum of testing period excess with an upper limit of Rs. 3 Crores. --------------------------------- Tariff Advisory Committee EAR/1-1-01 6 Insurers may reduce the excess to 10% of claim amount subject to minimum of testing period excess, with upper limit of Rs.